Trading position (short-term; our opinion): In our opinion no positions
are justified from the risk/reward perspective.

On Tuesday, crude oil lost 2.70% as the combination of disappointing Chinese
data and stronger U.S. dollar weighed on the price. Because of these circumstances,
the commodity bounced down the medium-term resistance zone and approached the
recent lows. Will they withstand the selling pressure?

Yesterday's data showed that China's official manufacturing index dropped
to 51.1 in August, while the HSBC manufacturing index ticked down to 50.2.
These disappointing numbers fueled worries over demand in the world's second-largest
oil consumer and affected negatively the price of light crude.

Additionally, later in the day, the Institute for Supply Management reported
that its manufacturing purchasing managers' index increased to 59.0 in August,
beating expectations of a drop to 56.8. Although these bullish figures confirmed
that the U.S. economy continues to show signs of improvement, they also supported
the greenback, which made crude oil less attractive on dollar-denominated exchanges.
This was bearish for the commodity and pushed it to slightly above the recent
lows. What's next? Let's check the technical picture of light crude and find
out (charts courtesy of http://stockcharts.com).

The weekly chart clearly shows that the strong resistance zone created by
the previously-broken 200-week moving average and the rising, long-term support
line, successfully stopped further improvement and the commodity reversed,
declining sharply to around the recent low. This is a bearish signal, which
suggests that if crude oil moves lower, the last week's upswing will be nothing
more than a verification of the breakdown and we'll see a test of the strength
of the Jan low of $91.24. At this point, it's worth noting that although the
CCI and Stochastic Oscillator are oversold, they didn't generate buy signals,
which could support oil bulls at the moment.

Will the very short-term chart give us more clues about future moves? Let's
check.

(...) Although the very short-term picture suggests further improvement
as light crude remains above the upper line of the consolidation and buy
signals are still in play, it seems to us that this medium-term resistance
zone could trigger a pullback in the coming day (or days). If this is the
case, we may see a comeback to the upper border of the formation.

As you see on the daily chart, oil bears not only realized the above-mentioned
scenario, but also managed to push the commodity lower and light crude approached
the recent lows. Taking this fact into account, you're probably wondering whether
they withstand the selling pressure or rather we'll see a test of the 2014
low.

From the technical point of view, this is the point from where crude oil should
go north (at least later today) as the proximity to the support level will
likely encourage some investors to push the buy button. But is this the right
place to open long positions? Not really. The reason? Firstly, light crude
is still trading in the declining trend channel, which means that even if we
see a rebound from here, oil bulls will have to push the price above the upper
line of the formation before we'll see another sizable upward move. Secondly,
as we mentioned earlier, crude oil still remains below the strong medium-term
resistance zone, which keeps gains in check. Finally, when we take a closer
look at the daily chart, we clearly see that the recent corrective upswing
is much smaller than the previous one, which means that oil bulls are even
weaker than they were in July. Therefore, in our opinion, the downward trend
is not threatened at the moment and another attempt to move lower should not
surprise us. If this is the case, we think that the next downside target will
be the combination of the 2014 low and the lower border of the declining trend
channel around $91.24-$91.50.

Summing up, the medium-term outlook remains bearish and in our opinion
opening long positions is currently not justified from the risk/reward perspective.
Yesterday, crude oil reversed and declined sharply, approaching the recent
lows and as we have pointed out before, although we may see a rebound from
here in the very short-term (especially if the EIA weekly report on crude oil
inventories will be bullish for the commodity), it will not serve as a buy
signal unless the medium-term resistance is taken out. We'll keep you informed.

Nadia is a private investor and trader, dealing in currencies, commodities
(mainly crude oil), and stocks. Using her background in technical analysis,
she spends countless hours identifying market trends, major support and resistance
zones, breakouts and failures. In her writing, she presents complex ideas with
clarity that enables you to easily understand market changes, and profit on
them. Nadia is the person behind Sunshine
Profits' 3 premium trading services: Forex
Trading Alerts, Oil
Trading Alerts Alerts, and Oil
Investment Updates.

All essays, research and information found above represent analyses and opinions
of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove
wrong and be a subject to change without notice. Opinions and analyses were
based on data available to authors of respective essays at the time of writing.
Although the information provided above is based on careful research and sources
that are believed to be accurate, Nadia Simmons and his associates do not guarantee
the accuracy or thoroughness of the data or information reported. The opinions
published above are neither an offer nor a recommendation to purchase or sell
any securities. Nadia Simmons is not a Registered Securities Advisor. By reading
Nadia Simmons's reports you fully agree that he will not be held responsible
or liable for any decisions you make regarding any information provided in
these reports. Investing, trading and speculation in any financial markets
may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and
affiliates as well as members of their families may have a short or long position
in any securities, including those mentioned in any of the reports or essays,
and may make additional purchases and/or sales of those securities without
notice.

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takes advantage of the emotionality on the markets, and invites you to do
the same.

His company, Sunshine Profits, publishes analytical software that anyone can
use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem
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High quality and profitability of analytical tools available at www.SunshineProfits.com are
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PR believes that the greatest potential is currently in the precious metals
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the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for
professional excellence and ethics for the ultimate benefit of society.

Disclaimer: All essays, research and information found above represent
analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates
only. As such, it may prove wrong and be a subject to change without notice.
Opinions and analyses were based on data available to authors of respective
essays at the time of writing. Although the information provided above is
based on careful research and sources that are believed to be accurate, Przemyslaw
Radomski, CFA and his associates do not guarantee the accuracy or thoroughness
of the data or information reported. The opinions published above are neither
an offer nor a recommendation to purchase or sell any securities. Mr. Radomski
is not a Registered Securities Advisor. By reading Przemyslaw Radomski's,
CFA reports you fully agree that he will not be held responsible or liable
for any decisions you make regarding any information provided in these reports.
Investing, trading and speculation in any financial markets may involve high
risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates
as well as members of their families may have a short or long position in
any securities, including those mentioned in any of the reports or essays,
and may make additional purchases and/or sales of those securities without
notice.